Page 10 - Banking Finance June 2025

RBI CORNER

existing borrowers. RBI may also ex- RBI Drafts New KYC Guidelines for Inoperative Ac-
empt certain strategic AIFs in consul-
tation with the Centre. This proposal counts and Business Correspondents
aims to balance financial discipline with The Reserve Bank of India (RBI) has proposed new draft guidelines to sim-
growth opportunities in the AIF sector. plify the reactivation of inoperative accounts and enhance Know Your Cus-
The central bank has invited public tomer (KYC) updates. Banks must now offer KYC update facilities at all
comments on the proposal. The up-
branches, including non-home branches, and through Video Customer Iden-
dated framework comes as part of
tification Process (V-CIP) if available. Additionally, authorised business cor-
RBI's broader push to streamline in- respondents (BCs) may assist customers in updating KYC and reactivating
vestment rules while preserving sys- dormant accounts.
temic stability in capital allocation.
For cases with no change in KYC or only address changes, BCs can collect
RBI Reviews Economic self-declarations and documents, authenticate them via eKYC, and forward
them to the bank. Customers must receive acknowledgment upon submis-
Capital Framework Ahead sion. RBI stressed that while BCs assist, ultimate responsibility for KYC lies

of Dividend Decision with banks.
The Reserve Bank of India's (RBI) Cen- The central bank also proposed that banks issue at least three advance and
tral Board has reviewed the Economic three post-due reminders for KYC updates, recording all communications.
Capital Framework (ECF), which guides Public comments on the draft are invited by June 6, with the aim of improv-
the calculation of surplus funds to be ing accessibility and compliance.
transferred to the government. This
framework, introduced on August 26,
2019, is based on recommendations Know Your Customer (KYC) updates, ment Surges 27% to Rs.
from the Bimal Jalan committee, which particularly in cases where no change 2.69 Lakh Crore for FY25
advised maintaining the Contingent in details or only an address change is The Reserve Bank of India (RBI) has
Risk Buffer (CRB) within a range of 5.5% reported. As per the draft guidelines, approved a record Rs. 2.69 lakh crore
to 6.5% of the RBI's balance sheet. In BCs can collect self-declarations and dividend transfer to the central govern-
FY24, the RBI paid a record Rs. 2.1 documents post-biometric eKYC au- ment for FY25, marking a 27% increase
lakh crore to the government, up from thentication and either upload them from Rs. 2.11 lakh crore in FY24. The
electronically or submit authenticated
Rs. 87,416 crore in FY23. robust payout is attributed to gains
physical copies to the bank.
The upcoming dividend for FY25 is ex- from dollar sales, higher returns on
BCs must provide customers with an
pected to surpass previous years and foreign assets, and liquidity operations.
will be finalized during the next board acknowledgment of receipt, and the It surpasses the Rs. 2.56 lakh crore divi-
meeting scheduled for May 23. The bank must update records and inform dend estimated in the FY26 Budget.
615th board meeting was chaired by the customer once the process is com- Despite the substantial transfer, the
Governor Sanjay Malhotra in Mumbai. plete. However, the RBI clarified that dividend could have been higher had
the ultimate responsibility for KYC
The review of the ECF is crucial in de- the RBI not raised the Contingent Risk
termining the size of the surplus trans- compliance remains with the bank. Buffer (CRB) to 7.5% from 6.5% under
fer and ensuring sufficient risk provi- Banks must also give customers at least the revised Economic Capital Frame-
sioning for the central bank. three advance notices before the KYC work (ECF). This buffer mitigates risks
update deadline, including one by post, tied to monetary and fiscal stability.
RBI Proposes Role Expan- followed by three reminders if the up- Madan Sabnavis of Bank of Baroda
dates are not completed. Additionally,
sion for Business Corre- BCs may assist in reactivating inopera- noted the dividend could offset short-
falls in customs revenue, tax collec-
spondents in KYC Updates tive accounts. The RBI has invited pub- tions, or increased defence spending.
lic feedback on the proposal by June 6.
The Reserve Bank of India (RBI) has Gaura Sengupta of IDFC First Bank
proposed permitting business corre- called the higher CRB prudent amid
spondents (BCs) to handle periodic RBI Dividend to Govern- pressure on US Treasury yields.

BANKING FINANCE | JUNE | 2025 | 9